Insurable Interest: As Intended?

On January 14,2008, the Law Commissions published! Issues Paper No.4 which covers insurable interest as part of a programme to reform UK insurance law. In doing so they noted, with respect to indemnity insurance, the accidental effect of the Gambling Act 2005 which came into force on September 1, 2007 and appears to circumvent the statutory requirement for an insurable interest in this category of insurance. That result, surprising as it has ramifications not debated at the time, comes about in this way. By s.4(2) of the Marine Insurance Act 1906 a contract of marine insurance is still deemed to be a gaming or wagering contract if there is no insurable interest or expectation of gaining an insurable interest and by s.4(l) it is void. Furthermore, under the Marine Insurance (Gambling Policies) Act 1909, it is a criminal offence to take out a marine policy without an insurable interest. By s.18 of the Gaming Act 1845 other indemnity insurances were void if an insurable interest was lacking although there was no criminal sanction attached. Now, since the Gambling Act 2005 and its repeal of s.18 of the Gaming Act 1845, the fact that a contract relates to gambling does not prevent its enforcement. In summary, for indemnity insurance other than marine the lack of an insurable interest will not render the contract unenforceable. The same is arguably so of a marine insurance although, as it remains a criminal offence to take out a contract of marine insurance without interest, a fair, large and liberal construction of the relevant legislation as a whole makes this doubtful. Was this result serendipitous or is it likely to cause problems? If the former, should the 1909 Act be repealed to put marine insurance on the same footing as other indemnity policies? ....